Most credit cards have a grace period (also known as a free period) that allows you to pay your bill in full without incurring finance charges. The grace period, generally around 25 days, is the period of time between the date of purchase and the date when the company begins charging interest on that amount. Some credit card companies provide a grace period on new purchases even if the balance is not paid in full every month. Other companies may charge interest on new purchases if you do not pay your balance in full from the preceding month—in addition to the interest charged on your unpaid balance.

If your company does not offer a grace period it means that finance charges are imposed on the date that you use your card or when the transaction appears on your account. Most credit card companies do not offer grace periods for cash advances or balance transfers, and interest begins accruing immediately at the time of these transactions. Check your monthly statement or your credit card agreement for information about how your particular credit card company calculates finance charges. Some cards have grace periods that only last 20 days from the date of the transaction, and if you wait to pay your bill until the due date on your statement, you still will owe interest. If your credit card has a grace period, the issuer is required to mail your bill at least 14 days prior to the due date to allow you enough time to pay. Before signing up for a credit card, be sure to fully evaluate the offer and read the fine print so that you know all the terms and conditions. Online resources such as www.federalreserve.gov and www.ftc.gov can help you consider the right factors before selecting a card.